Download 1) - Georgia State University

ECON2100
Fall 2008
Exam I
1)
Economics is best classified as
a)
a social science
b)
a natural science
c)
a humanity
d)
none of the above
2)
The main focus of economics is on
a)
financial decision making
b)
efficiency
c)
historical behavior of individuals
d)
none of the above
3)
Macroeconomics tends to focus on
a)
The economy as a whole
b)
The behavior of individual economic agents
c)
Primarily on financial markets
d)
None of the above
4)
Assume that you have purchased shares in Wachovia Bank one year ago for 55
dollars/share. Today these shares are being traded for 15 dollars/share. What is the
economic cost of continuing to own these shares today (ignore any tax implications)
a)
$55
b)
$40
c)
$15
d)
$0
5)
In order to adequately compare the standards of living across countries one must
compare the following measure, (converted into the same currency for comparison
purposes):
a)
GNP per capita levels
b)
Real GNP per capita levels
c)
GNP per capita based on purchasing price parity
d)
GDP per capita
For questions 6 – 7 use the table below
Country
A
B
C
D
E
6)
GNP per
capita
2000
3000
2500
2200
1900
GNP per capita
based on PPP
2200
2600
2700
2100
2300
Which of the countries has the highest standard of living?
a)
A
b)
B
c)
C
d)
D
e)
E
7)
Which county has the highest cost of living?
a)
A
b)
B
c)
C
d)
D
e)
E
8)
Which of the following facts is wrong?
a)
In the US economy the largest component of the GDP is the spending by
households (Consumption)
b)
The US economy constitutes approximately a quarter of the world economy
c)
Most of the world’s population lives in high income and upper middle
income countries
d)
Currently the US economy experiences a trade deficit
e)
None of the above
9)
If the US experiences higher inflation than the Euro zone, then, all else held constant,
we should expect
a)
the USD to appreciate against the Euro
b)
the USD to depreciate against the Euro
c)
the value of the USD in terms of the Euro to remain the same
d)
inflation and currency exchange value are not related
10)
Depreciation of the USD would lead to
a)
an increase in the rate of inflation
b)
a decrease in the rate of inflation
c)
inflation being unchanged
d)
inflation and currency exchange value are not related
11)
In order to be counted as unemployed in the US one must meet the following:
a)
be registered with a state labor department
b)
collect unemployment compensation
c)
simply have no job and be actively looking for work
d)
none of the above
12)
In the second half of the 1990’s the US economy experienced very low inflation
rates. This was in part due to
a)
a depreciating US dollar
b)
increasing property values
c)
stock market boom
d)
dollar appreciation
13)
The labor force of a nation includes
a)
Employed individuals and unemployed individuals
b)
The total adult population of the country
c)
The total population of the country
d)
None of the above
14)
Which of the following statements about the GDP is not correct?
a)
The GDP accounts for only domestic value added in the production of final
goods and services
b)
If a good is exported it is considered as a final good in the exporting
economy, regardless of how it will be used in the importing economy
c)
The value of intermediate goods is included in the value of the final goods
d)
When computing the GDP one must subtract the value of imported goods
and services
e)
None of the above
For questions 15-17 state whether the listed activity will be reflected in
A – the US current GDP
B – the US current GNP
C – both, the US current GDP and US current GNP
D – neither in the US current GDP or the current GNP
15)
16)
17)
18)
A dividend payment paid by a Russian telecommunication company to a US
shareholder
Profits of Honda of America earned from its operations in the US which are sent to
the holding company, Honda in Japan
Purchase of a course at Emory University (a US private university)
Assume that an indexed for inflation bond pays 1% real rate of return. If the rate of
inflation happens to be 2% then the nominal rate of return on this bond should be set
to?
a)
3%
b)
2%
c)
1%
d)
0%
e)
-1%
20)
If the rate of inflation is 2%, and your savings account pays a fixed 5% nominal interest
then the real return on your account is:
a)
5%
b)
2%
c)
3%
d)
8%
e)
-2%
23) It is an established fact that in developed economies, such as that of the US, more of
domestic activities (household activities, such as cooking, housework…) are being observed
in the market place, and hence are being accounted for in the GDP. This is due to …
a)
the fact that in developed economies labor force participation rates tend to be
lower
b)
the fact that in developed economies the opportunity cost of time tends to be
higher
c)
none of the above
24)
Japanese companies often invest overseas as a result of that the foreign business
presence inside Japan is smaller than the presence of Japanese companies overseas.
Due to this we are more likely to see
a)
the GDP of Japan exceed the GNP of Japan
b)
the GNP of Japan exceed the GDP of Japan
c)
the GNP to be exactly equal to the GDP
25)
The NAFTA agreement had stipulated a gradual removal of trade restrictions. In part
this is due to the fact that a rapid removal of trade restrictions can lead to
a)
Frictional unemployment
b)
Seasonal unemployment
c)
Cyclical unemployment
d)
Structural unemployment
26)
Inflation is expected to be rising when
a)
The unemployment rate is less than the natural unemployment
b)
The unemployment rate is greater than the natural unemployment
c)
The unemployment rate is equal to the natural unemployment
True[A] / False[B] Section
27)
presence of a large underground economy tends to make the official government statistics
for GDP and GNP understate the true level of economic activity
28)
Inflation can be defined as the rate of loss in the purchasing power of money
29)
Unanticipated inflation is capable of redistributing real wealth from lenders to borrowers
30)
Hyper inflation, such as the one in Zimbabwe today, is usually caused by a significant
expansion of the money supply by the nation’s monetary authority (the printing of money by the
Central Bank)
Thanks for taking the test.